Hood River: Home to windsurfers, microbrews—and military drones that help kill America’s enemies.

On a winter day in the Columbia Gorge in 2004, Tad McGeer watched a video from a battlefield 7,000 miles away.

One of McGeer’s co-workers had just brought the video home from Iraq. Filmed from the air, the footage revealed tiny figures moving about an open field below.

Suddenly, the figures on the computer screen were engulfed in an explosive fireball.

For McGeer, it was an unsettling moment. The video was captured by a camera on board an unmanned aerial drone, one of the newest weapons on battlefields in the global war on terror.

The person responsible for creating that drone was McGeer—and his years of hard work were also partly responsible for the deaths he’d just watched on his screen.

“I thought it was pretty unpleasant business,” he recalls. “I’m told [the targets] were evildoers. Were they really? I don’t know. Certainly no court of law determined they were evildoers.”

McGeer never meant to build war machines when he started drawing plans in his garage in 1992.

He spent nearly 10 years perfecting drones for peaceful purposes like predicting weather or tracking tuna. But since the Sept. 11, 2001, terrorist attacks, his creations now function as the eyeballs of a cutting-edge U.S. program to gather wartime intelligence and assassinate its enemies.

The images from Iraq were filmed from a ScanEagle—the plane McGeer originally built and that the Defense Department now finds so useful.

Though never weaponized with missiles like the more famous Predator drone, the ScanEagle is no less a part of the war effort. Flying at nearly 20,000 feet, it scans terrain or tracks targets from the air for up to 24 hours.

It can be controlled from anywhere in the world—delivering high-quality, real-time video both day and night.

“These things have some potential to actually surprise people and to catch them out in the open. They’ve turned out to be very useful,” says retired Air Force Gen. Merrill McPeak, a military analyist who lives in Lake Oswego. “They’re getting more important, not less important.”

One of the successful engines of that industry—a company that has delivered more than 1,000 unmanned drones for military use—is centered about 60 miles east of Portland in the Columbia River Gorge.

The company McGeer founded— Insitu Inc.—is rapidly eclipsing tourism as a source of jobs in the Gorge. But it’s also drawing fire from peace activists for war profiteering and what they see as a disturbing trend toward remote-controlled, robotic killing.

At odds with the military direction his company was taking, McGeer left Insitu in 2005. Three years later, when Boeing bought the company for $400 million, McGeer made millions—exactly how much he won’t say.

“I made a Faustian bargain,” says McGeer, a lanky 52-year-old Canadian who lives with his wife and daughter in Hood River. “And when you make a Faustian bargain, you can’t complain when the devil shows up at the door.”

Many of his neighbors in the Gorge have no such qualms.

The residents of Hood River and surrounding towns on both banks of the Gorge have built an industry that, according to public statements made by Insitu executives, now generates more than $200 million a year amid this recession. The drones they’ve built have logged hundreds of thousands of flight hours over Iraq and Afghanistan, above disaster zones like earthquake-ravaged Haiti, or patrolling pirate-infested seas off the coast of Somalia.

It may seem an unlikely niche in a region better known for windsurfing, mountain biking and microbrews. But the Gorge has a big footprint in the global war on terrorism, and the industry is reshaping the area.

Former military men with short-cropped hair—visiting to learn how to fly and maintain the drones—are now a more common sight around town than skiers from Mount Hood, says Hood River Mayor Arthur Babitz.

FOUNDING FATHER: Tad McGeer started Insitu in 1992, then was ousted by the board and newcomer Steve Sliwa. IMAGE: leahnash.com

The mayor says the drone industry has almost single-handedly anchored the service industry and local tax revenues during the recession—not to mention employing more than 1,000 locals, both at Insitu and local businesses directly supplying the company with parts and services.

“It’s the sort of good-paying jobs that every small community would love to have,” says Babitz, a high-tech entrepreneur with his own animation company. “We’re very thankful and grateful that they’re here. It’s a bright spot for the entire Gorge region.”

But not every local is so sanguine about the Gorge’s newfound fortune.

Disturbed about their community’s growing reliance on the military, activists are holding a three-day conference on robotic warfare in Hood River next month. Nationally known antiwar protester Cindy Sheehan is scheduled to attend.

“It’s the same as putting a gun to the back of someone’s head,” says Susan Garrett Crowley, a retired 65-year-old lawyer from Hood River who’s helping organize next month’s conference, April 16-19. “It would horrify people. But do it from 7,000 miles away, and there is no public outcry.”

Insitu, the company drawing Crowley’s ire, is a success by any economic measure.

With headquarters in Bingen, Wash. (population 672), the company has grown from just three employees to more than 700, spread across offices from The Dalles to Vancouver, Wash.

In 2008, the same year Boeing bought Insitu for $400 million, Insitu upped its commitment to aggressively woo international customers, opening a branch office in Queensland, Australia.

Winning contracts with the U.S., Canadian and Australian militaries, the company has already logged more than 200,000 hours in Iraq and Afghanistan alone.

Insitu executives, about half of whom worked with McGeer before he left in 2005, declined to comment for this story. But last summer, CEO Steve Sliwa announced revenues in 2009 were expected to top $200 million.

Until now, the company has mainly leased aircraft, with Insitu employees operating the drones in the field.

Now the Defense Department wants to buy its own, and Insitu is competing to win a large contract this year to sell 1,000 copies of its newest plane—the larger Integrator drone.

The contract is worth hundreds of millions of dollars. But with better-known rivals like Raytheon and General Dynamics also in the race, the outcome is far from certain. Success with the Integrator would not only boost Insitu, but cement the Gorge’s role as a major hub for building drone aircraft.

From welders to wing-builders, construction contractors to computer programmers, the drone industry has cast its shadow over smaller shops and businesses up and down the Gorge.

Even sprawling orchards like Andy von Flotow’s, four miles west of Hood River.

Just installed on von Flotow’s 100-acre orchard is a 200-foot tube of plastic sheeting connected to a 100-horsepower fan.

The 90-mph breeze that blasts through the tube creates a wind tunnel. The enormous length allows distance to cancel the noise of the fan to allow accurate acoustic testing on airplane engines.

Built last month, the tunnel is part of von Flotow’s efforts to make Insitu’s ScanEagle and Integrator into quieter flying machines. Less noise will mean the planes can fly lower and collect better video, without their insectlike buzz being heard from below.

The tunnel is the latest gadget among millions of dollars’ worth of hardware that lies scattered among a series of barns and former horse stables on von Flotow’s property. His otherwise bucolic farm features Bartlett pears, Bing cherries and Honeycrisp apples.

More than 100 of von Flotow’s employees swarm around the property and at two other locations in the Gorge, building giant slingshots to launch drones, designing better gyroscopelike devices known as gimbals to support the planes’ spy cameras, and testing their engines.

Von Flotow, a 54-year-old Canadian with piercing blue eyes and a dry sense of humor, presides over the operation with the glee of a manic genius. Von Flotow is the original reason Insitu is in the Gorge—and insiders say he continues to generate most of the company’s innovations.

That involves providing the generals and colonels who occasionally visit his farm with a rotating menu of possible improvements, von Flotow says. He also fields complaints from war zones about faulty equipment—and gets praise when his newest gadgets exceed expectations.

“Then the enthusiasm wears off and I have to invent something better yet, or somebody else will. It’s such a rat race,” von Flotow says with a grin.

Unlike McGeer, von Flotow has no qualms about his work.

“It’s a pleasant hobby, and it makes money. Making money is fun,” von Flotow says. “I’d feel just as guilty if I made toilet paper.”

Raised on a soybean and corn farm in southern Ontario, von Flotow met McGeer when they were studying for their Ph.D.s in aeronautics at Stanford University in the early 1980s. Von Flotow moved to Hood River in 1993, and McGeer followed a year later.

Like many others, von Flotow came to Hood River for its rural charm and killer windsurfing. McGeer’s needs were more immediate—motivated by the technical challenge and the desire to start his own business, he was designing an unmanned plane and needed space to fly.

The idea wasn’t groundbreaking—unmanned aircraft had been used sporadically since the early 20th century. But no one had perfected a small, versatile drone with proven commercial applications.

With help from von Flotow, McGeer set out to solve a problem plaguing civilian meteorologists. With satellites, scientists could watch weather as it forms. But the old method of sending ships with weather balloons to gather direct measurements from the atmosphere had been largely abandoned.

McGeer sought to fill the data void by building an unmanned plane to measure temperature, pressure, humidity and wind speed. With funding from the Australian government, McGeer, von Flotow and a small team built Aerosonde, a 30-pound plane with an onboard computer powered by a modified model-airplane engine.

With a successful 1998 flight from Newfoundland to Scotland on a gallon and a half of gas, Aerosonde became the first unmanned plane ever to cross the Atlantic.

The publicity stunt captured headlines. But McGeer never managed to sell more than a handful of the drones—despite some enthusiastic support from within the bureaucracies of national weather services around the world, they could not be swayed into buying.

“That was life,” von Flotow says. “When you’re running a little garage business—and there’s many such businesses—you’re always chasing the dream, and the dream never quite makes it into your grasp.”

The next opportunity at McGeer’s door came from the tuna industry, of all places.

Tuna companies track schools of the fish using helicopters. It’s expensive and dangerous work, and McGeer was told the industry would pay for a plane that could launch from a boat with a camera to do the job.

McGeer set to work designing a new unmanned plane he called the SeaScan.

Again with help from von Flotow, McGeer and five employees worked at a dizzying rate of invention to master the biggest technical hurdle—launching and retrieving the plane from the deck of a ship.

They came up with a 14-foot catapult that slingshots the plane into the air at more than 50 mph, then spent years perfecting and eventually patenting the so-called “sky hook” landing system, which lets the plane fly into a rope suspended from a pole.

With a maximum speed of about 90 mph, the SeaScan was the first unmanned plane able to deliver high-quality video footage. Like the Aerosonde, however, the SeaScan never found a successful market.

This time, it was terrorists who got in the way.

Just as the SeaScan prototype was being completed, the 9/11 attacks came. McGeer had already been in contact with Boeing and others in the defense industry for the better part of a year about possible military uses for SeaScan.

Now they left the tuna industry behind and went into high gear. But not without reservations.

“There were plenty of people who weren’t comfortable. But we went along with it,” McGeer says. “I took an ends-justify-the-means argument—that taking this money would allow me to get into the civilian market. But I was wrong. That never happened.”

Insitu underwent other rapid changes in 2001. McGeer called in Steve Sliwa, a friend he knew from their undergrad days at Princeton, to turn Insitu around. And coincidentally, the day before 9/11, the Boeing Co. first agreed to invest in Insitu.

With Boeing’s marketing help, Insitu courted the Department of Defense, whose generals liked the products they saw. With the glacially slow pace of federal defense contracting, Insitu began shipping ScanEagles to Iraq in summer 2004.

As a result of that success, McGeer says the company board became focused on serving the defense industry. But McGeer continued to have qualms, especially about his drones supporting a questionable war in Iraq.

McGeer says he wanted to restructure Insitu with a new branch dedicated to civilian applications, but Sliwa opposed it. With the board behind him, McGeer says Sliwa ousted him in 2005.

Sliwa declined repeated requests to comment for this story.

When Boeing bought Insitu in 2008, the deal made millionaires of both McGeer and von Flotow, who still owned shares in the company.

McGeer says he would give all that money back if it meant he could prevent the conflicts that made him rich.

“If you gave me the choice of turning back the clock and saying no to war in Iraq and Afghanistan—if you could buy peace for a few million dollars—of course [I would],” he says. “I’m using the money to try to get done what wasn’t done with Insitu.”

While von Flotow continues to be the brains behind Insitu, McGeer’s interests have moved him in a new direction.

On March 1, McGeer met with a few friends at his office in tiny Husum, Wash., to roll out the Flexrotor—a new drone he built over the past four years with the help of five employees in Aerovel, the company he started after leaving Insitu.

Flight tests won’t start until later this year, but if the Flexrotor works, it will be a remarkable achievement. The 42-pound plane with a 10-foot wingspan is designed to take off and land vertically, requiring less space for launch and retrieval. With a propeller that doubles as a helicopter rotor, the plane can hover vertically or fly horizontally.

Takeoff, landing, refueling and relaunching will all happen automatically, with no need for people on site.

McGeer hopes to fulfill his original dream of selling drones for civilian uses, including weather observation and geological surveying—markets he says Insitu abandoned when the company opted for easy money in the defense industry.

Unlike his earlier civilian ventures, McGeer hopes the Flexrotor will succeed because it’s cheaper and better designed. Without being specific, he says it will probably sell for “tens of thousands” of dollars.

When pressed, he says he won’t actively pursue defense contracts—but he won’t rule out the possibility entirely. He still believes military drones can do useful work.

THE AIR APPARENT: McGeer and his team at Aerovel walk in rural Washington on March 1 with the company’s Flexrotor. IMAGE: leahnash.com

“There are people who are dead today who would not be dead were it not for the [ScanEagle]. There are [also] people who are alive today who would not be alive were it not for the aircraft,” he says. “How that balances out, I don’t know.”

Somewhere between McGeer’s moral reservations and von Flotow’s comparison of making drones to making toilet paper are two other contributors to the Gorge’s growing industry for war, Ross Hoag and Bill Vaglienti, founders of Cloud Cap Technology in Hood River.

The two worked for McGeer in the 1990s, building the autopilot and designing software for the Aerosonde.

They left Insitu in 1999 to start Cloud Cap, where along with 35 employees they build autopilots, inertial measurement units and camera systems for just about every maker of small drones on the market, except Insitu.

Both say they wrestle with the morality of making a living building war machinery. Both say they’d much rather be working on civilian applications like tracking wildfires. But they stand by their defense work.

“I don’t make it a weapon. My customers might. I can’t control that,” Vaglienti says. “This is the stuff that’s used to pull the trigger, and it’s also used to [find] an IED [improvised explosive device].”

Drones from the Gorge and elsewhere are used for both purposes. But it’s the heroic side of high-altitude surveillance that Insitu’s PR department tends to promote.

On its website, Insitu highlights the April 12, 2009, rescue of Capt. Richard Phillips from Somali pirates in the Gulf of Aden. Navy SEALs managed to kill four of the pirates and save the ship using surveillance from a ScanEagle.

It’s the dark side of drone warfare that’s raised concerns from United Nations rights investigators, officials in targeted countries, and even U.S. military personnel. They say drone assassinations may not only violate international law but actually undermine national security.

Begun under the Bush administration, military and CIA use of drones has mushroomed under President Obama. According to a study last fall by the Washington, D.C.-based New America Foundation, Obama sanctioned at least 41 CIA missile strikes during his first nine months in office—more than Bush did in his last three years combined.

Local officials in Afghanistan and Pakistan say many of the estimated 300 to 500 people killed were innocent bystanders, including women and children. Taliban leaders seize on those collateral deaths for anti-American publicity.

And that track record inflames Susan Garrett Crowley and the other antiwar activists who organized a protest last September when Washington Gov. Chris Gregoire visited Insitu. McGeer also spoke at one of the activists’ meetings last year about the history of unmanned aerial vehicles.

Garrett Crowley says she is concerned fighting wars by remote control makes it more likely the U.S. will enter future conflicts—because killing from a distance means no American casualties.

The drones built in the Gorge are merely the eyes of the system, gathering information instead of raining death from the sky. But she argues Insitu is just as complicit in the outcome.

“Evil is banal. We’re all capable of it. And the truth about people who like designing beautiful tools is that they prefer not to think about how those tools are used,” she says. “We don’t want to blame our neighbors for making the tools. But we do want to question the use to which those tools are put.”